Humanitarian Demining Poses a Business Opportunity for Ukraine’s Allies and a New Direction for Development Aid

The Impact of Demining in Ukraine: Opportunities for Development Aid and Business

Introduction

The Russian invasion of Ukraine over the past two years has resulted in the mining of more than 174,000 square kilometers of Ukrainian territory, which accounts for over 28 percent of the country. The World Bank estimates that the total cost of demining in Ukraine is $37 billion. This situation presents an opportunity for the United States, Ukraine’s biggest supporter in its fight against Russia, to provide development aid and explore emerging business opportunities.

U.S. Commitments and Ukraine’s Needs

The United States has committed over $113 billion in emergency funding to support Ukraine since the beginning of the invasion. However, funding for demining only accounts for a small portion of this support. In July 2023, $95 million was provided for demining, in addition to the $228 million allocated in the Additional Ukraine Supplemental Appropriations Act of 2022.

The Challenge of Demining

Demining a territory larger than Greece requires significant financial resources. The main obstacle to the functioning of a demining market in Ukraine is the high cost of demining operations, which exceeds the value of the land itself. According to the Kyiv School of Economics, the cost of examining a parcel of land can reach more than $3,000 per hectare, and machine demining can cost more than $30,000 per hectare. As a result, small and medium-sized farms cannot afford demining, and state services prioritize demining cities and communal infrastructure projects.

A Pilot Program for Demining

One proposed solution is the creation of a donor-supported scheme to reimburse part of the costs paid by local farmers for demining. This approach would allow Ukrainian demining operators to gain experience, train personnel, and provide market-like services to Ukrainian farmers. The Ukrainian government has already launched a state compensation program with $75 million, which serves as proof of concept for efficient allocation of development aid for demining.

Business Opportunities for U.S. Companies

In addition to the humanitarian dimension, there are significant business opportunities for U.S. defense and military businesses in Ukraine, which is now the world’s largest demining market. The recent simplification of certification rules for demining operators has removed certain barriers to entry into this market. U.S. companies could expand into demining operations in Ukraine, starting with activities such as civilian information campaigns or technical land surveys.

Equipment and Technology Needs

All types of demining activities require substantial amounts of equipment, both hardware and software. There is a significant need for affordable and modern vehicles, demining equipment, smaller drones, and software applications, including AI-based solutions, to facilitate land surveys and mine clearance. International demining leaders have already localized equipment production in Ukraine, providing employment opportunities for local communities.

Investment in Ukraine’s Military Tech Sector

Ukrainian military startups offer war-tested technologies and lucrative investment returns. U.S. venture capital funds have begun investing in the Ukrainian market, but there is still vast untapped potential. In the long term, Ukrainian demining and military-related startups could supply products to other regions, expanding the market scope and potential revenues.

Conclusion

The need for demining in Ukraine is immense, but so are the opportunities. Through development aid and strategic business investments, the United States can play a crucial role in helping Ukraine clear its land of mines while also opening up a new frontier for American enterprises in the defense and technology sectors.

The opinions expressed in this article are those solely of the author and do not reflect the views of the Kennan Institute.

Source: wilsoncenter.org